Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2024 (2) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (2) TMI 545 - MADRAS HIGH COURTContinuation of criminal proceedings as against company no longer in existence/ dissolved/ amalgamated - Protection u/s 32 of IBC - Legal effect of amalgamation of two companies - corporate existence of the transferor company - criminal liability of a company being merged/dissolved - HELD THAT:- The moment the Corporate Insolvency Resolution Process is initiated against the corporate debtor and the application is accepted by the NCLT, the moratorium comes into operation. Once the resolution plan is accepted by the NCLT and orders are passed and the Corporate debtor gets into hands of the new management, all the past liabilities including the criminal liability of the Corporate debtor gets wiped off and the new Management takes over the company with clean slate. In the instant case, the A1 company has now gone into the hands of the new management, pursuant to the order passed by the NCLT. In view of the same, the new management takes over the A1 company as a clean slate and the criminal liability can no longer be mulcted as against A1 company. Therefore, the continuation of criminal proceedings as against A1 company can no longer subsist. Company has been taken over by a new management and the criminal liability cannot be passed on to the new management. The criminal liability of a company cannot be transferred to another company or the new management ipso facto. Therefore, the new management apart from not taking over the criminal liability of the A1 company, cannot also be made to undergo criminal prosecution for the offence committed by the persons who were incharge of the company during the relevant point of time. This Court has already recorded the fact that A2 has already died and therefore, the charge abates insofar as A2 is concerned. Accordingly, the proceedings as against A1 company in all these complaints stands quashed. It is left open to the respondent to identify the persons who were in-charge of running the company and were involved in the day today affairs of the company during the relevant point of time and it will be left open to the respondent to continue the criminal prosecution as against those officers.
|